However, I live in a dusty area, would the filtration ability be compromised to the point where I coul have warranty issues.

If you worry about the dirt in your engine, please stay away from KN filter. It is not for you. If you want to see if you can gain a few horses , just try using old panty hose for filtration device. There is possibility the placebo effect works better on you than me.

If you decide to install the KN, make sure you change oil and filter more frequently. Of course, if you lease your vehicle, any thing goes.